A “proven system” comes with all of the logistics worked out - sort of like purchasing a ‘turn-key’ home instead of a home that needs a full renovation. There are already standard operating procedures in place, branding, advertising, training standards, and everything else that a proven system, for example, a Subway franchise, has in place upon selling or purchasing. A proven system is ready to be fully operational immediately, and likely already has a following of loyal consumers as well as a proven method of turning leads into customers. On the contrary, a single, privately owned sandwich shop has none of this infrastructure in place, must create these systems in addition to attempting to successfully gain a popular following of clients. Since Sandwich Shop#2 is likely privately held, the sole proprietor spends an extraordinary amount of money on services that come included with a well known proven system - such as the high dollar amount of advertising.
Leverage is the infrastructure built into a "proven system," such as the Subway franchise example - including but not limited to the preexisting social awareness/consciousness of the brand identity, public familiarity with the brand's products, the high dollar cost of advertising spent to generate leads and grow customer base,, as well as the "sales funnel." The power of leverage concerns, for example, the cost/benefit ratio between free and Paid traffic. Paid advertising has an immediate advantage over free trafficking - mainly because "free" trafficking costs something more valuable than money - and that is time, typically lots of it. While paid traffic (an aspect of leverage) allows the business to 'scale up,' the primary use of low ticket offers combined with the high cost of paid traffic is a recipe for disaster for a company's profit margin. The Subway franchise illustrates perfectly the power of leverage - purchasing a ready-made money-making franchise where many of the major overhead costs (such as national advertising) are in place and being paid for by Subway.
The best business model is a model which features Top-Tiered, High-Ticket items exclusively, and is an exclusively digital business. The products are high-quality, high-cost, and exist as online services, courses, educational materials, and all other High-Ticket items that fall under the digital umbrella. By extricating the physical business and storefront, you rid yourself of most of the overhead traditionally associated with the cost of running a business: inventory, employees, insurance, shipping, liabilities, etc. This leaves most of the profit generated by the business as just that - pure profit. By featuring High-Ticket, Top-Tiered items exclusively, the profit margins on sales are quite high. Incorporating low-ticket, low-tiered items then becomes feasible, as you are able to offset the high cost of advertising with the high profits gained from your Top-Tiered products, and use low-ticket, low-tiered items as well. A successful business model will use the Five Principles discussed in the first lesson. It will drive traffic to its marketplace through various means, thereby selling more products and creating more profit. It will incorporate the conversion (sales) funnel to build brand awareness in potential clients, which will generate interest in the business, often leading to the decision to purchase goods and services from the business (action), and the business will retarget consumers through advertising. The successful business model will filter the process and remove any blocks, turning leads into prospects, prospects into consumers, and consumers into sales. The business will follow up and focus on CRM to regenerate sales from potential and past consumers. Finally, a successful business will provide tiered products, featuring upgrades and upsells, and different price points to attract a large volume and varied types of consumers.
The Ultimate Profit Model combines Top-Tier and a Digital Platform. This will effectively be the most lucrative approach because it eliminates overhead, generates high-profit margins, removes the need for employees, inventory, and shipping costs, and absolves the business from the high cost of insurance and liability. The "why" then becomes quite straightforward - the business is creating the highest revenue with the lowest cost, thereby generating the highest profits possible.
The 5 Essential Elements in Any Successful Online Business:
Driving traffic to your online business (more traffic = more products sold = more profit)
Conversion (sales) Funnel (Build Awareness of your company, generate interest, facilitate the opportunity for a decision by the consumer, leading to the consumer taking action in buying your product, at which point you retarget them to keep them coming back